BlackRock Reaffirms Long-Term Bitcoin (BTC) Thesis After 50% Selloff

Bitcoin News

BlackRock has reaffirmed its long-term investment case for Bitcoin (BTC) in an August 2026 research report, arguing that the asset's more than 50% decline from its October 2025 all-time high of $124,606 was driven by leverage and shifting flows rather than a structural bear market. The report, titled “Re-Underwriting Bitcoin,” attributes the slide to excessive derivatives positioning, weaker institutional inflows and slower buying by digital-asset treasury companies. It points to futures open interest that exceeded $90 billion near the peak, with roughly 80% concentrated in offshore perpetual contracts offering leverage between 50 and 125 times. The initial sharp unwind came after U.S. tariffs on China were announced on Oct. 10, 2025, when Bitcoin fell 6% and open interest dropped about $20 billion in a single day, the largest such reduction in the data the firm reviewed. Additional liquidation waves hit in February and June 2026, ultimately dragging Bitcoin below $60,000, and in May the CFTC cleared KalshiEX's onshore Bitcoin perpetual product, ruling that its structure met federal derivatives rules. Spot Bitcoin exchange-traded products had attracted roughly $60 billion from their January 2024 U.S. launch through October 2025, then recorded about $5 billion in aggregate outflows by July 2026. Over that same stretch, AI-themed funds drew more than $46 billion, a rotation BlackRock said “likely competed for capital.” Corporate treasury selling added to the pressure: a March regulatory filing showed MARA selling 15,133 BTC for roughly $1.1 billion, and Strategy disclosed in an Aug. 10 SEC filing that it sold 1,690 BTC between Aug. 3 and Aug. 9, generating $108.6 million used to repurchase STRC preferred shares. BlackRock's historical tests found that a 1% or 2% Bitcoin allocation in a U.S. 60/40 portfolio improved risk-adjusted returns, lifting the Sharpe ratio to 0.90 and 0.96, respectively, from 0.81, while maximum drawdowns stayed close at 20.6% and 20.9% versus 20.3%. The firm nonetheless warns that Bitcoin remains volatile, speculative and capable of producing a total loss.

The report was written by Robert Mitchnick and colleagues in the firm's digital-asset division and published Aug. 17, and it goes beyond the drawdown itself to argue that the unwinding of speculative leverage has made Bitcoin's trading environment healthier while structural demand remains intact. The paper describes the correction as a positioning and liquidity event rather than proof that the asset's monetary or diversification properties have changed. It highlights what it calls Bitcoin's “dual nature”: in liquidation cascades the coin falls in step with risk assets, but during geopolitical stress, including the U.S.–Iran tensions cited in the study, it has exhibited hedge-like behavior closer to safe-haven assets. The authors say that short-term correlation spikes do not erase the long-run profile, which showed a 0.18 correlation with the S&P 500 over the past decade. They also compare Bitcoin with gold, arguing that a mathematically capped supply makes it a strategic complement to portfolios seeking protection against declining fiat purchasing power. Rising U.S. and global government debt and fiscal deficits, the report argues, reinforce the case for holding assets outside central-bank influence. The firm had recommended a 1%–2% Bitcoin allocation to financial advisors in June 2026, and the new paper revalidates that guidance using post-drawdown data. On flows, BlackRock believes structural inflows to cryptocurrency could return once the rotation into generative-AI funds cools. Recent U.S. spot fund data has been more constructive, showing net inflows of $297.5 million on Aug. 17 and $189.3 million on Aug. 18, a combined $486.8 million after roughly $385.2 million of withdrawals in the prior week. The outlook is not a price forecast, the firm stresses, and its assessment is separate from its management of the iShares Bitcoin Trust ETF. The simulations were hypothetical, no actual BlackRock client portfolio was included, and diversification cannot prevent market losses.

COINOTAG's proprietary 42-indicator composite S/R scoring engine scores the $63,562.51 support at 84/100, driven by a resistance flip, the S2 pivot, Ichimoku Senkou A and the Fibonacci 0.236 retracement. The $64,366.43 resistance scores 60/100, underpinned by the EMA 50 and a flipped support/resistance zone. Spot sits at $64,175.15, with Bitcoin pressing that resistance. Funding is 0.0003%, open interest is $13.21 billion and the long/short ratio is 1.61 (61.8% long), while the Fear & Greed Index at 46 keeps sentiment cautious. Holding the $63,562 support keeps the $64,366–$64,980 path open; a daily close below it would invalidate the bullish setup and expose $62,617.